Minnesota Rubber to expand in Litchfield thanks to financial incentives from multiple avenues
LITCHFIELD -- A marriage between private industry and public entities is culminating in a $5 million expansion project that will get underway next month at a manufacturing company in Litchfield.
The partnership will add 30,000 square feet of industrial space to Minnesota Rubber and Plastics and create at least 45 new jobs.
"It is very exciting," said Suzanne Hedtke, director of the Meeker County Economic Development Authority, and one of the matchmakers in the courtship that involved the state, city and county offering financial incentives to entice Minnesota Rubber and Plastics to expand here rather than across the border. "They're a progressive, good company and willing to take that step. It's great when you can have a project like this and see it come to fruition."
After touring the facility this spring and promising assistance, the Minnesota Department of Employment and Economic Development is coming through with a low-interest loan from their investment fund. New legislation allows the city to apply for a Greater Minnesota Development Infrastructure grant that will benefit the company. Meeker County is providing a low-interest loan from its revolving loan fund. Public hearings are also scheduled next month to grant the company a tax abatement on the expansion.
That kind of assistance and community confidence is necessary to help businesses grow, Hedtke said.
Company representatives are equally pleased with the partnership and acknowledge the expansion could've easily have gone to another one of their company locations -- Wisconsin, South Dakota, Iowa, China, Mexico or France -- without the attractive financial package that Minnesota, Meeker County and the city of Litchfield offered.
"Without that support we probably wouldn't have expanded in Litchfield," said Bruce Richardson, chief financial officer for Quadion Corporation, the parent company of Minnesota Rubber and Plastics.
Tim Rauenhorst, plant manager at the Litchfield facility, said government is oftentimes criticized for not doing enough to promote job growth. This was a clear case of local and state government "stepping up and saying we're your partner in growth," said Rauenhorst, who also had high praise for the Litchfield Chamber of Commerce's role in energizing the cooperative project.
The payoff for the community is adding at least 45 new local manufacturing jobs to the plant, which currently has about 200 employees, at a time when good paying jobs can be hard to find.
"We're going to turn that around to the local economy for the area," said Jeff Amundson, operations manager. "We touch a lot of folks."
What is it?
Richardson acknowledges many people aren't familiar with Minnesota Rubber and Plastics but they probably use their products every day, like when they turn on a faucet, drive a vehicle, cook or have surgery.
Since it was founded in 1945, the company has prided itself in manufacturing "the tough parts" for plumbing, automotive, food, appliance and medical industries.
The Litchfield plant, built about 20 years ago, makes more than 1,300 different parts for well-known companies like Medtronic, Boston Scientific, GM, Ford, Kohler, Black & Decker and Honeywell.
The company provides engineering, design, compound development and manufacturing of custom- molded elastomeric and thermoplastic components and assemblies, according to their Web site.
In 2009 they manufactured a quarter of a billion parts in Litchfield, Amundson said.
During the economic slowdown they saw a decline in some of their automotive business, where they supply components like gaskets and O-rings.
But the company's role in manufacturing components for medical devises has grown and promises to grow even more.
About six years ago, the Litchfield facility made just a handful of medical components. They now make nearly 600 different parts, like handles for surgical instruments, Amundson said.
The growth in the medical field came about because the company had already established high quality standards for manufacturing for other industries. When medical customers toured the Litchfield facility they were impressed, said Rauenhorst.
The 30,000-square-foot expansion will allow the company to move its shipping, receiving, baking, washing and the finishing processes, like freezing and tumbling off excess rubber or silicone, into the new part of the plant.
The high-tech and costly equipment that molds the components will remain in the existing 40,000-square-foot building, which will now include "clean rooms" that will enhance medical manufacturing.
With current revenues at about $25 million at the Litchfield plant, the expansion and movement into the medical field is expected to increase revenues to $40 million in five years said Amundson.
The growth in manufacturing medical devices makes up nearly 50 percent of the company's total new growth product, Rauenhorst said.
Why not China?
Quadion Corporation's manufacturing plant in China is also seeing explosive growth, Rauenhorst said. But instead of shipping those items back to the United States, most are being marketed to meet the needs of Chinese customers.
And although labor is cheaper in China, clever automation -- like a machine that plucks tiny adhesive labels from a sheet of paper and applies them to a black rubber part no bigger than a child's fingernail -- helps keeps their U.S. made products competitive, Amundson said.
The financial assistance for the expansion is also another reason why Litchfield and not China was selected for this major expansion of the company's medical manufacturing.
"We want to be here in the United States," said Richardson. "To be competitive with China, that's where we needed the support from the state, county and city," he said. "We're grateful for the support given us."